UNITED STATES


SECURITIES AND EXCHANGE COMMISSION


WASHINGTON, D.C.  20549




FORM 10-Q




[X]  Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934




For the quarterly period endedMarch 31, 2010




or




[   ] Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934




For the transition period from ________________________ to ________________________.




Commission File Number: 0-8667




PUBLIC STORAGE PROPERTIES, LTD.


(Exact name of registrant as specified in its charter)





California
95-3196921(State or other jurisdiction of
(I.R.S. Employerincorporation or organization)
Identification Number)701 Western Avenue, Glendale, California
91201-2349(Address of principal executive offices)
(Zip Code)




R
egistrant’s telephone number, including area code: (818) 244-8080.






Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for at least the past 90 days.




[X]  Yes
[   ]  No





Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).




[   ]  Yes
[   ]  No




Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer a non-accelerated filer or a smaller reporting company.  See the definitions of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.




Large Accelerated Filer [  ]
Accelerated Filer [  ]
Non-accelerated Filer [X]
Smaller Reporting Company [  ]




Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).




[   ]  Yes
[X]  No




The Registrant is a limited partnership and issues units representing ownership of limited partner interests, with a par value of $500.00 per unit.  Number of units outstanding at May 12, 2010:  20,000.





PUBLIC STORAGE PROPERTIES, LTD.INDEXPART I
FINANCIAL INFORMATION (Item 3 is not applicable)
PagesItem 1.
Financial Statements (Unaudited)Condensed Balance Sheets at March 31, 2010

and December 31, 2009
1Condensed Statements of Income for the

Three Months Ended March 31, 2010 and 2009
2Condensed Statements of Partners’ Equity for the

Three Months Ended March 31, 2010
3Condensed Statements of Cash Flows for the

Three Months Ended March 31, 2010 and 2009
4Notes to Condensed Financial Statements
5 - 10Item 2.
Management’s Discussion and Analysis of

Financial Condition and Results of Operations
11 - 14Item 4.
Controls and Procedures
15PART II.
OTHER INFORMATION (Items 2 – 5 are not applicable)Item 1.
Legal Proceedings
16Item 1A.
Risk Factors
16Item 6.
Exhibits
16



















PUBLIC STORAGE PROPERTIES, LTD.


CONDENSED BALANCE SHEETS




March 31,

2010


December 31,

2009(Unaudited)ASSETSCash and cash equivalents

$
405,000


$
422,000Rent and other receivables


63,000



68,000Due from affiliates


-



559,000Real estate facilities, at cost:Buildings, land improvements and equipment


10,308,000



10,296,000Land


2,476,000



2,476,00012,784,000



12,772,000Less accumulated depreciation


(9,624,000
)


(9,588,000
)3,160,000



3,184,000Other assets


60,000



47,000Total assets

$
3,688,000


$
4,280,000LIABILITIES AND PARTNERS’ EQUITYAccounts payable and accrued liabilities

$
212,000


$
111,000Deferred revenue


150,000



165,000Total liabilities


362,000



276,000Commitments and contingencies (Note 6)Partners’ equity:Limited partners’ equity, $500 per unit, 20,000 units

authorized, issued and outstanding


2,470,000



2,973,000General partners’ equity


856,000



1,031,000Total partners’ equity


3,326,000



4,004,000Total liabilities and partners’ equity

$
3,688,000


$
4,280,000


See accompanying notes.
 1


PUBLIC STORAGE PROPERTIES, LTD.


CONDENSED STATEMENTS OF INCOME


(UNAUDITED)




Three Months Ended

March 31,2010


2009REVENUES:Rental income

$
1,776,000


$
1,858,000Other income


53,000



43,0001,829,000



1,901,000COSTS AND EXPENSES:Cost of operations


392,000



395,000Management fees paid to affiliate


106,000



111,000Depreciation


36,000



34,000Administrative


34,000



21,000568,000



561,000NET INCOME

$
1,261,000


$
1,340,000Limited partners’ share of net income

$
768,000


$
980,000General partners’ share of net income


493,000



360,000$
1,261,000


$
1,340,000Limited partners’ share of net income per unit (20,000 units outstanding)

$
38.40


$
49.00








See accompanying notes.
 2


PUBLIC STORAGE PROPERTIES, LTD.


CONDENSED STATEMENT OF PARTNERS’ EQUITY


(UNAUDITED)




Limited

Partners’


General

Partners’


Total Partners’ EquityBalance at December 31, 2009

$
2,973,000


$
1,031,000


$
4,004,000Net income


768,000



493,000



1,261,000Cash distributions


(1,440,000
)


(499,000
)


(1,939,000
)Equity transfer


169,000



(169,000
)


-Balance at March 31, 2010

$
2,470,000


$
856,000


$
3,326,000


See accompanying notes.
 3


PUBLIC STORAGE PROPERTIES, LTD.


CONDENSED STATEMENTS OF CASH FLOWS


(UNAUDITED)




For the Three Months Ended

March 31,2010


2009Cash flows from operating activities:Net income

$
1,261,000


$
1,340,000Adjustments to reconcile net income to net cash

provided by operating activities:Depreciation


36,000



34,000Decrease in rent and other receivables


5,000



12,000Decrease in due from affiliates


559,000



-(Increase) decrease in other assets


(13,000
)


6,000Increase in accounts payable and accrued liabilities


101,000



47,000Decrease in deferred revenue


(15,000
)


(31,000
)Total adjustments


673,000



68,000Net cash provided by operating activities


1,934,000



1,408,000Cash flows from investing activities:Additions to real estate facilities


(12,000
)


(12,000
)Net cash used in investing activities


(12,000
)


(12,000
)Cash flows from financing activities:Distributions paid to partners


(1,939,000
)


(1,401,000
)Net cash used in financing activities


(1,939,000
)


(1,401,000
)Net decrease in cash and cash equivalents


(17,000
)


(5,000
)Cash and cash equivalents at the beginning of the period


422,000



802,000Cash and cash equivalents at the end of the period

$
405,000


$
797,000


See accompanying notes.
 4
 PUBLIC STORAGE PROPERTIES, LTD.
 NOTES TO CONDENSED FINANCIAL STATEMENTS
 (UNAUDITED)


1.
Description of Partnership




Public Storage Properties, Ltd. (the "Partnership") is a publicly held limited partnership formed under the California Uniform Limited Partnership Act in November 1976.  The Partnership raised $10,000,000 in gross proceeds by selling 20,000 units of limited partnership interest ("Units") in an interstate offering, which commenced in October 1977 and completed in January 1978.  The general partners in the Partnership are Public Storage, formerly Public Storage, Inc., (“PS”) and B. Wayne Hughes (“Hughes”).




The Partnership was formed to engage in the business of developing and operating self-storage facilities which offer storage spaces for lease, generally on a month-to-month basis, for personal and business use.  The Partnership owns nine self-storage facilities located in California.




2.
Summary of Significant Accounting Policies and Partnership Matters




Basis of Presentation:




The accompanying unaudited condensed financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) as defined in the Financial Accounting Standards Board Accounting Standards Codification (the “Codification”), including the related guidance with respect to interim financial information, and in conformity with the instructions to Form 10-Q and Article 10 of Regulation S-X.  Accordingly, they do not include all of the information and notes required by GAAP for complete financial statements.  In the opinion of management, all adjustments (consisting of normal and recurring adjustments) considered necessary for a fair presentation have been reflected in these unaudited condensed financial statements.  Operating results for the three months ended March 31, 2010 are not necessarily indicative of the results that may be expected for the year ending December 31, 2010 due to seasonality and other factors.  The accompanying unaudited condensed financial statements should be read together with the financial statements and related notes included in the Partnership’s Annual Report on Form 10-K for the year ended December 31, 2009.




Use of Estimates:




The preparation of the condensed financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the condensed financial statements and accompanying notes.  Actual results could differ from those estimates.




Financial Instruments:




The Partnership has estimated the fair value of our financial instruments using available market information and appropriate valuation methodologies.  Considerable judgment is required in interpreting market data to develop estimates of market value.  Accordingly, estimated fair values are not necessarily indicative of the amounts that could be realized in current market exchanges.




For purposes of financial statement presentation, we consider all highly liquid financial instruments such as short-term treasury securities, money market funds with daily liquidity and a rating of at least AAA by Standard and Poor’s, or investment grade (rated A1 by Standard and Poor’s) short-term commercial paper with remaining maturities of three months or less at the date of acquisition to be cash equivalents.




Due to the short maturity and the underlying characteristics of our cash and cash equivalents, other assets, due from affiliates and accrued and other liabilities, we believe the carrying values as presented on the condensed balance sheets are reasonable estimates of fair value.




5
 PUBLIC STORAGE PROPERTIES, LTD.
 NOTES TO CONDENSED FINANCIAL STATEMENTS
 (UNAUDITED)




Financial assets that are exposed to credit risk consist primarily of cash and cash equivalents as well as rent and other receivables.  Cash and cash equivalents, as described above, are only invested in instruments with an investment grade rating. Our receivables consist of small individual amounts.  Accordingly, credit risk on these assets as a whole is minimal.




Real Estate Facilities and Evaluation of Asset Impairment:




Real estate facilities are recorded at cost.  Costs associated with the acquisition, development, construction, renovation and improvement of properties are capitalized.  Interest, property taxes and other costs associated with development incurred during the construction period are capitalized as building cost. Expenditures for repairs and maintenance are expensed when incurred.  Depreciation expense is computed using the straight-line method over the estimated useful lives of the buildings and improvements, which generally range from 5 to 25 years.  At March 31, 2010, all of the real estate facilities have been in service longer than 25 years, and accordingly the original development costs of such buildings are fully depreciated.




We evaluate our real estate for impairment on a quarterly basis.  We first evaluate these assets for indicators of impairment, and if any indicators of impairment are noted, we determine whether the carrying value of the real estate is in excess of the future estimated undiscounted cash flows attributable to the real estate.  If there is excess carrying value over such future undiscounted cash flows, an impairment charge is recorded for the excess of carrying value over the real estate’s estimated fair value.  Any real estate facility which we expect to sell or otherwise dispose of prior to its estimated useful life is stated at the lower of its estimated net realizable value (estimated fair value less cost to sell) or its carrying value.  No impairment was identified from our evaluations in any periods presented in the accompanying condensed financial statements.




Revenue and Expense Recognition:




Rental income, which is generally earned pursuant to month-to-month leases for storage space, as well as late charges and administrative fees, are recognized as earned.  Promotional discounts are recognized as a reduction to rental income over the promotional period, which is generally during the first month of occupancy.  Interest income is recognized as earned.




We accrue for property tax expense based upon actual amounts billed for the related time periods and, in some circumstances due to taxing authority assessment and billing timing and disputes of assessed amounts, estimates and historical trends.  If these estimates are incorrect, the timing and amount of expense recognition could be affected.




Cost of operations, general and administrative expense, as well as television, yellow page, and other advertising expenditures are expensed as incurred.




Allocation of Net Income:




The general partners' share of net income consists of amounts attributable to their 1% capital contribution and an additional percentage of cash flow (as defined) which relates to the general partners' share of cash distributions as set forth in the Partnership Agreement (Note 4).  All remaining net income is allocated to the limited partners.




Per unit data is based on the weighted average number of the limited partnership units (20,000) outstanding during the period.




6
 PUBLIC STORAGE PROPERTIES, LTD.
 NOTES TO CONDENSED FINANCIAL STATEMENTS
 (UNAUDITED)




Deferred Revenue:




Deferred revenue totaling $150,000 at March 31, 2010 ($165,000 at December 31, 2009), consists of prepaid rents, which are recognized as rental income when earned.




Environmental Cost:




The Partnership’s policy is to accrue environmental assessments and/or remediation costs when it is probable that such efforts will be required and the related costs can be reasonably estimated.  Although there can be no assurance, we are not aware of any environmental contamination at any of our facilities, which, individually or in the aggregate, would be material to our overall business, financial condition or results of operations.




Income Taxes:




Public Storage Properties, Ltd. is treated as a partnership for federal and state income tax purposes with the taxable income of the entity allocated to each partner in accordance with the Partnership Agreement.  Accordingly, no federal income tax expense is recorded by the Partnership.




Recent Accounting Pronouncements and Guidance:




As of May 12, 2010, there have been no recent accounting pronouncements and guidance, which were not effective for implementation prior to March 31, 2010, that would have a material impact upon reporting the operations or financial position of the Partnership.




Segment Reporting:




The Partnership only has one reportable segment.




3.
Cash Distributions




The Partnership Agreement requires that cash available for distribution (cash flow from all sources less cash necessary for any obligations or capital improvements) be distributed at least quarterly.  During the three months ended March 31, 2010, we paid distributions to the limited and general partners totaling $1,440,000 ($72.00 per unit) and $499,000, respectively, as compared to $1,040,000 ($52.00 per unit) and $361,000, respectively, for the same period in 2009.  Future distribution rates may be adjusted to levels which are supported by operating cash flow after provisions for capital improvements and any other obligations.




4.
Partners' Equity




PS and Hughes are general partners of the Partnership.  In 1995, Hughes contributed his ownership and rights to distributions from the Partnership to BWH Marina Corporation II, a corporation wholly-owned by Hughes.  In 2002, BWH Marina Corporation II sold its interests to H-G Family Corporation.  As such, Mr. Hughes continues to act as a general partner but receives no direct compensation or other consideration from the Partnership.




The general partners have a 1% interest in the Partnership.  In addition, the general partners have an 8% interest in cash distributions attributable to operations (exclusive of distributions attributable to sale and financing proceeds until the limited partners recover all of their initial investment).  Thereafter, the general partners have a 25% interest in all cash distributions (including sale and financing proceeds).  In 1985, the limited partners recovered all of their initial investment.  All subsequent cash distributions are being made 25.75% (including the 1% interest) to the general partners and 74.25% to the limited partners.  Transfers of equity are made periodically to reconcile the partners' equity accounts to the provisions of the Partnership Agreement.  These transfers have no effect on the results of operations or distributions to partners.




7
 PUBLIC STORAGE PROPERTIES, LTD.
 NOTES TO CONDENSED FINANCIAL STATEMENTS
 (UNAUDITED)




5.
Related Party Transactions




Management Agreement and Shared Expenses with PS




The Partnership has a management agreement (the “Management Agreement”) with PS pursuant to which PS operates the Partnership’s self-storage facilities for a fee equal to 6% of the facilities' gross revenue (as defined).  For the three months ended March 31, 2010 and 2009, the Partnership paid PS $106,000 and $111,000, respectively, pursuant to this Management Agreement.




The Management Agreement between the Partnership and PS provides that the Management Agreement may be terminated without cause upon 60 days written notice by the Partnership or six months notice by PS.




The Partnership’s facilities, along with facilities owned by PS and its affiliates, are managed and marketed jointly by PS in order to take advantage of scale and other efficiencies.  Joint costs are allocated on a methodology meant to fairly allocate such costs based upon the related activities.  As a result, significant components of cost of operations, such as payroll costs, advertising and promotion, data processing and insurance expenses are shared and allocated among the properties using methodologies meant to fairly allocate such costs based upon the related activities.  The total of such expenses, substantially all of which are included in cost of operations in our accompanying condensed statements of income, amounted to $202,000 and $198,000 for the three months ended March 31, 2010 and 2009, respectively.




Ownership of Limited Partnership Interest by the General Partners




PS owns 6,274 Limited Partnership Units (“Units”), as to which PS has sole voting and dispositive power.




At December 31, 2008, Hughes and members of his family (the “Hughes Family”) owned 6,105 Units.  Hughes owned 6,025 Units, as to which Hughes had sole voting and dispositive power, through a wholly-owned corporation and Tamara Hughes Gustavson, an adult daughter of Hughes, owned 80 Units as to which Tamara Hughes Gustavson had sole voting and dispositive power.  On January 1, 2009, PS exercised its option to acquire 25 of the Units held by Hughes and the 80 Units held by Tamara Hughes Gustavson for a cost of approximately $20,000.  At March 31, 2010, Hughes owns 6,000 Units.




In addition, there are 196 Units owned by PS Orangeco Partnerships, Inc., a corporation in which the Hughes Family owns approximately 48% of the voting stock, PS owns 46% and members of PS management and related individuals own approximately 6%.




8
 PUBLIC STORAGE PROPERTIES, LTD.
 NOTES TO CONDENSED FINANCIAL STATEMENTS
 (UNAUDITED)





Captive Insurance Activities with PS




The Partnership has a 0.9% ownership interest in STOR-Re Mutual Insurance Corporation (“STOR-Re”), which was formed in 1994 as an association captive insurance company, and is controlled by PS.  The Partnership accounts for its investment in STOR-Re, which is included in other assets on our accompanying condensed balance sheets, on the cost method, and has received no distributions during the three months ended March 31, 2010 or 2009.




STOR-Re provides limited property and liability insurance coverage to the Partnership, PS, and affiliates for losses occurring before April 1, 2004.  STOR-Re was succeeded with respect to these activities for losses occurring after March 31, 2004 by a wholly owned subsidiary of PS (collectively, this entity and STOR-Re are referred to as the “Captive Entities”).  Liabilities for losses and loss adjustment expenses include an amount determined from loss reports and individual cases and an amount, based on recommendations from an outside actuary that is a member of the American Academy of Actuaries, using a frequency and severity method, for losses incurred but not reported.  Determining the liability for unpaid losses and loss adjustment expense is based upon estimates and while we believe that the amount is adequate, the ultimate loss may be in excess of or less than the amounts provided.  The methods for making such estimates and for establishing the resulting liability are reviewed quarterly.




Other Activities with PS




PS Insurance Company - Hawaii, Ltd. (“PSICH”), is a corporation owned by PS that reinsures policies against losses to goods stored by tenants in the Partnership’s and PS’ storage facilities.  PSICH receives the premiums and bears the risks associated with the re-insurance.  The Partnership receives a fee (an “Access Fee”) from PSICH in return for providing tenant listings.  This Access Fee is based on the number of spaces the Partnership has to rent.  Included in other income on our accompanying condensed statements of income for these Access Fees are $52,000 and $40,000 for the three months ended March 31, 2010 and 2009, respectively.




A subsidiary of PS sells locks and boxes to the general public and tenants to be used in securing their spaces and moving their goods.  The subsidiary of PS receives the revenues and bears the cost of the activities.




Due from Affiliates




As of December 31, 2009, the Partnership had $559,000 in amounts due from affiliates.  These amounts arose in December 2009 from the timing of the settlement of shared costs and were collected in January 2010.




6.
Commitments and Contingencies




Legal Matters:




Brinkley v. Public Storage, Inc. (filed April 2005) (Superior Court of California – Los Angeles County)




The plaintiff sued PS on behalf of a purported class of California non-exempt employees based on various California wage and hour laws.  Plaintiff sought certification for alleged meal period violations, rest period violations, failure to pay for travel time, failure to pay for mileage reimbursement, and for wage statement violations.  The Court certified subclasses based only on alleged meal period and wage statement violations.  In June 2007, the Court granted PS’ summary judgment motion as to the causes of action relating to the subclasses certified and dismissed those claims.  Plaintiff appealed.  The Court of Appeals sustained the dismissal.  The California Supreme Court granted review but deferred the matter pending disposition of a related issue in another case.  This litigation involves the Partnership’s properties as well as those of Public Storage.  If there were a loss incurred in this case, the Partners would have to pay their pro-rata share of the loss in accordance with the Management Agreement.




9
 PUBLIC STORAGE PROPERTIES, LTD.
 NOTES TO CONDENSED FINANCIAL STATEMENTS
 (UNAUDITED)




Other Items




PS and the Partnership are a party to various claims, complaints, and other legal actions that have arisen in the normal course of business from time to time that are not described above.  We believe that it is unlikely that the outcome of these other pending legal proceedings including employment and tenant claims, in the aggregate, will have a material adverse impact upon the Partnership’s operations or financial position.




10


Item 2.    Management’s Discussion and Analysis of Financial Condition and Results of Operations




The following discussion and analysis should be read in conjunction with the Partnership’s condensed financial statements and notes thereto.




Forward Looking Statements:  This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of the federal securities laws.  All statements in this document, other than statements of historical fact, are forward-looking statements which may be identified by the use of the words "expects,"   "believes,"   "anticipates,"  "plans," "would," "should," "may," "estimates" and similar expressions.  These forward-looking statements involve known and unknown risks and uncertainties, which may cause Public Storage Properties, Ltd.’s (the “Partnership”) actual results and performance to be materially different from those expressed or implied in the forward-looking statements.  As a result, you should not rely on any forward-looking statements in this report, or which management may make orally or in writing from time to time, as predictions of future events nor guarantees of future performance.  We caution you not to place undue reliance on forward-looking statements, which speak only as of the date of this report or as of the dates indicated in the statements.  All of our forward-looking statements, including those in this report, are qualified in their entirety by this statement.  We expressly disclaim any obligation to update publicly or otherwise revise any forward-looking statements, whether as a result of new information, new estimates, or other factors, events or circumstances after the date of this document, except where expressly required by law.  Accordingly, you should use caution in relying on past forward-looking statements to anticipate future results.




Factors and risks that may impact our future results and performance include, but are not limited to, those described in Item 1A, "Risk Factors" in the Public Storage Properties, Ltd. Annual Report on Form 10-K for the year ended December 31, 2009 and in our other filings with the Securities and Exchange Commission (“SEC”).  These risks include, among others, the following:




·
general risks associated with the ownership and operation of real estate including changes in demand, potential liability for environmental contamination, adverse changes in tax laws, including property tax rates and assessments, real estate and zoning laws and regulations, and the impact of natural disasters;
  ·
risks associated with downturns in the local economies in the markets in which we operate, including risks related to current economic conditions;
  ·
the impact of competition from new and existing self-storage and commercial facilities and other storage alternatives;
  ·
the impact of the regulatory environment as well as national, state, and local laws and regulations including, without limitation, those governing environmental, tax and tenant insurance matters, and risks related to the impact of existing and potential new laws and regulations;
  ·
disruptions or shutdowns of our automated processes and systems or breaches of our data security; and
  ·
economic uncertainty due to the impact of war or terrorism.


The risks included here are not exhaustive as it is not possible for management to predict all possible risk factors that may exist or emerge from time to time. Investors should refer to our future reports and other information filed from time to time with the SEC for additional information.




11





Critical Accounting Policies




Management’s Discussion and Analysis of Financial Condition and Results of Operations discusses our financial statements, which have been prepared in accordance with United States (“U.S.”) generally accepted accounting principles (“GAAP”).  The preparation of our financial statements and related disclosures in conformity with GAAP and our discussion and analysis of our financial condition and results of operations requires management to make judgments, assumptions and estimates that affect the amounts reported in our condensed financial statements and accompanying notes.  The notes to the Partnership’s March 31, 2010 condensed financial statements, primarily Note 2, summarize the significant accounting policies and methods used in the preparation of our condensed financial statements and related disclosures.




Management believes the following are critical accounting policies the application of which has a material impact on the Partnership’s financial presentation.  That is, they are both important to the portrayal of our financial condition and results, and they require management to make judgments and estimates about matters that are inherently uncertain.




Impairment of Real Estate: Substantially all of our assets consist of real estate.  The evaluation of our real estate for impairment includes determining whether indicators of impairment exist, which is a subjective process.  When any indicators of impairment are found, the evaluation then entails projections of future operating cash flows, which also involves significant judgment.  Future events, or facts and circumstances that currently exist, that we have not yet identified, could cause us to conclude in the future that our real estate is impaired.  Any resulting impairment loss could have a material adverse impact on the Partnership’s financial condition and results of operations.




Estimated Useful Lives of Long-Lived Assets:Substantially all of our assets consist of depreciable, long-lived assets.  We record depreciation expense with respect to these assets based upon their estimated useful lives.  Any change in the estimated useful lives of those assets, caused by functional or economic obsolescence or other factors, could have a material adverse impact on our financial condition or results of operations.




Accruals for Contingencies: We are exposed to business and legal liability risks with respect to events that have occurred, but in accordance with GAAP, we have not accrued for certain potential liabilities because the loss is either not probable or not estimable or because we are not aware of the event.  Future events and the results of pending litigation could result in such potential losses becoming probable and estimable, which could have a material, adverse impact on our financial condition or results of operations.  Significant unaccrued losses that we have determined are at least reasonably possible are described in Notes 5 and 6 to the Partnership’s March 31, 2010 condensed financial statements.




Accruals for Operating Expenses:We accrue for property tax expense and other operating expenses based upon estimates and historical trends and current and anticipated local and state government rules and regulations.  If these estimates and assumptions are incorrect, our expenses could be misstated.




Overview of Management’s Discussion and Analysis of Operations




The self-storage industry is highly fragmented and is composed predominantly of numerous local and regional operators.  Competition in the markets in which we operate is significant and has increased over the past several years due to additional development of self-storage facilities.  We believe that the increase in competition has had a negative impact on the Partnership’s occupancy levels and rental rates in many markets.  However, we believe that the Partnership’s affiliation with Public Storage (“PS”) provides several competitive advantages, such as economies of scale in marketing and operations, which enable the Partnership to compete effectively with other owners and operators.




PS is the largest owner and operator of self-storage facilities in the U.S.  All of the PS facilities in the U.S. are operated under the “Public Storage” brand name, which we believe is the most recognized and established name in the self-storage industry.  The concentration of most of the PS and Partnership properties in major metropolitan centers makes various promotional and media programs, such as television, yellow pages, and Internet keyword bidding, far more economical for us than for our competitors.




12







The self-storage industry is subject to general economic conditions, particularly those that affect the disposable income and spending of consumers, as well as those that affect moving trends.  Due to the recessionary pressures in the U.S., demand for self-storage space has been negatively impacted since the fourth quarter of 2008.  As a result, we have experienced downward pressure on occupancy levels, rental rates, and revenues in our self-storage facilities have declined on a year-over year basis since the first quarter of 2009.




We will continue to focus our growth strategies on improving the operating performance of our existing self-storage properties primarily through increases in revenues achieved through the national telephone reservation system and associated marketing efforts.  We expect any potential future increases in rental income to come primarily from increases in realized rent rather than increases in occupancy, although there can be no assurance that we will experience such increases.




Results of Operations




Operating Results for the Three Months ended March 31, 2010 and 2009:




The Partnership's net income for the three months ended March 31, 2010 was $1,261,000, as compared to $1,340,000 for the same period in 2009, representing a decrease of $79,000 or 5.9%.  This decrease was due primarily to an $82,000 reduction in rental income described below.




Rental income for the three months ended March 31, 2010 was $1,776,000, as compared to $1,858,000 for the same period in 2009, representing a decrease of $82,000 or 4.4%.  The decrease in rental income was primarily a result of a 3.6% decrease in realized rent per square foot and a 1.2% decrease in occupancy.  Annualized realized rent for the three months ended March 31, 2010 decreased to $15.09 per occupied square foot, as compared to $15.66 per occupied square foot for the same period in 2009.  Weighted average occupancy levels at the self-storage facilities were 91.1% and 92.2% for the three months ended March 31, 2010 and 2009, respectively.




Based upon our evaluation of certain comparative key operating metrics as of March 31, 2010, including a 0.9% decline in square foot occupancy from 92.6% at March 31, 2009 to 91.8% at March 31, 2010, and 2.6% lower in place annual rent per occupied square foot from $16.78 at March 31, 2009 to $16.35 at March 31, 2010, we believe that revenue for the three months ending June 30, 2010 will decline as compared to the same period in 2009.  In place annual rent per occupied square foot represents annualized contractual rents per occupied square foot without reductions for promotional discounts and excludes late charges and administrative fees.  The Partnership’s operating strategy will be to continue to focus on maintaining high occupancy levels by adjusting rental rates, promotional discounts and marketing activities.  It is unclear to us how much the above mentioned factors will impact our revenues beyond the second quarter of 2010.




Other income was $53,000 for the three months ended March 31, 2010, as compared to $43,000 for the same period in 2009, representing an increase of $10,000 or 23.3%.  Included in other income are access fees paid by PS Insurance Company - Hawaii, Ltd. (“PSICH”) a corporation owned by PS (described more fully in Note 5 to the Partnership’s March 31, 2010 condensed financial statements), totaling $52,000 and $40,000 for the three months ended March 31, 2010 and 2009, respectively.  The Partnership has $405,000 in cash at March 31, 2010 invested primarily in money-market funds, which earn nominal rates of interest in the current interest rate environment.




Cost of operations, including management fees paid to an affiliate, (see Note 5 to the Partnership’s March 31, 2010 condensed financial statements) for the three months ended March 31, 2010 was $498,000, as compared to $506,000 for the same period in 2009, representing a decrease of $8,000 or 1.6%, as decreases in payroll, management fees, advertising and promotion and insurance expenses, were partially offset by increases in repairs and maintenance, property tax and office expenses.




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Depreciation expense was $36,000 and $34,000 for the three months ended March 31, 2010 and 2009, respectively, representing an increase of $2,000 or 5.9%.  The increase in depreciation expense is primarily related to additional capital improvements.




Administrative expense was $34,000 and $21,000 for the three months ended March 31, 2010 and 2009, respectively, representing an increase of $13,000 or 61.9%.  This increase is attributable to the timing of incurrence of tax return preparation fees.




Liquidity and Capital Resources




At March 31, 2010, the Partnership had cash of $405,000 as compared to total liabilities of $362,000.  Cash generated from operations ($1,934,000 for the three months ended March 31, 2010) has been sufficient to meet all current obligations of the Partnership.  Capital improvements totaled $12,000 for each of the three month periods ended March 31, 2010 and 2009.  Capital improvements are budgeted at $58,000 for the year ending December 31, 2010.




The Partnership does not anticipate issuing senior securities, making loans to other persons, investing in the securities of other issuers for the purpose of exercising control, underwriting the securities of other issuers, engaging in the purchase and sale of investments, offering securities in exchange for property, or repurchasing or otherwise reacquiring its outstanding securities.  The Partnership may consider borrowing money with the intent of using the proceeds for distribution to partners.  As the capital and credit markets are currently constrained and in flux, there can be no assurance that the Partnership would be able to access any such borrowings in order to do so, if such a course of action were otherwise deemed necessary.




Distributions




The Partnership Agreement requires that cash available for distribution (cash flow from all sources less cash necessary for any obligations or capital improvement needs) be distributed at least quarterly.  During the three months ended March 31, 2010, we paid distributions to the limited and general partners totaling $1,440,000 ($72.00 per unit) and $499,000, respectively, and $1,040,000 ($52.00 per unit) and $361,000, respectively, for the same period in 2009.  Future distribution rates will be adjusted to levels which are supported by operating cash flow after provisions for capital improvements and any other necessary obligations.




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Item 4.    Controls and Procedures




Public Storage maintains disclosure controls and procedures that are designed to ensure that information required to be disclosed in reports the Partnership files and submits under the Securities Exchange Act of 1934, as amended, (“Exchange Act”) is recorded, processed, summarized and reported within the time periods specified in accordance with SEC guidelines and that such information is communicated to the Partnership’s management, including Public Storage’s Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure based on the definition of "disclosure controls and procedures" in Rules 13a-15(e) and 15d-15(e) of the Exchange Act.  In designing and evaluating the disclosure controls and procedures, management recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives and management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures in reaching that level of reasonable assurance.




Under the supervision and with the participation of the Partnership’s management, including Public Storage’s Chief Executive Officer and Chief Financial Officer, Public Storage evaluated the effectiveness of the Partnership’s disclosure controls and procedures, as required by Exchange Act Rule 13a-15(b), as of the end of the period covered by this report.  Based on that evaluation, Public Storage’s Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective, at a reasonable assurance level.  There were no changes in our internal control over financial reporting during the quarter ended March 31, 2010 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.




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PART II.  OTHER INFORMATION




Item 1.    Legal Proceedings




The information set forth under the heading “Legal Matters” in Note 6 to the Partnership’s March 31, 2010 condensed financial statements in this Form 10-Q is incorporated by reference in this Item 1.




Item 1A.  Risk Factors




As of March 31, 2010, no material changes had occurred in our risk factors as discussed in Item 1A of the Public Storage Properties, Ltd. Annual Report on Form 10-K for the year ended December 31, 2009.




Item 6.    Exhibits




Exhibits required by Item 601 of Regulation S-K are filed herewith or incorporated herein by reference and are listed in the attached Exhibit Index which is incorporated herein by reference.




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SIGNATURES





Pursuant to the requirement of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.




DATED: May 12, 2010




PUBLIC STORAGE PROPERTIES, LTD.




BY:       Public Storage


General Partner





BY:       /s/ John Reyes


John Reyes


Senior Vice President and


Chief Financial Officer


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Exhibit No.
Exhibit Index31.1
Rule 13a-14(a) Certification.  Filed herewith.31.2
Rule 13a-14(a) Certification.  Filed herewith.32
Section 1350 Certifications.  Filed herewith.